PUERTO RICO REPORT

Calderón Loses Her Right Hand

by John Marino

The Calderón administration was dealt another blow this week when Secretary of Commerce and Economic Development Ramón Cantero Frau announced he was resigning to attend to "personal affairs."

The resignation of such a key post at the mid- point of the administrations four-year term is lending fire to critics who say its more evidence of an administration adrift.

The loss is particularly acute given Calderóns repeated statements that boosting the economy is her No. 1 priority, and Cantero Frau was the main person directing that effort.

The governor lauded the "brilliance" of Cantero Fraus performance in his post and appeared genuinely upset that he was moving on. The working relationship between the two stems back to the administration of Rafael Hernández Colón, when Calderón was Secretary of State and Chief of Staff and Cantero Frau was president of the Government Development Bank. He also headed the development of governor's campaign platform and her transition committee when she took power in Jan. 2001.

"The magnificent achievements we have had up until now are in great part due to [Cantero Frau's] leadership. However, when he took the position he committed to work in the post until the end of 2002, and that term has come and I am keeping my promise by accepting today with deep sorrow his resignation," the governor said.

Supporters say that Cantero Frau was able to put the brakes on the wave of manufacturing plant closures that struck the island when Calderón took office in January 2001. A decelerating U.S. and world economy, coupled with the loss of federal tax benefits in Puerto Rico, were the driving forces behind the closures.

But much of Cantero Fraus tenure was aimed at getting Congress to approve a new industrial incentive program for island manufacturers through amendments to Section 956 that has yet to be given serious consideration.

Cantero Frau, a heavy hitter in the local securities industries with lots of Wall Street connections, said he would resign to attend his business affairs, which he had to place in a blind trust to avoid conflicts of interest when he took over his post. Those close to Cantero Frau say he has lost a substantial amount of money because he has not been personally overseeing his various business ventures.

For a young administration, there has been a number of personnel changes. The administration saw five Cabinet members step down in June, including Agriculture Secretary Fernando Toledo, Economic Development Bank Director Maria Fuentes Pujols and Office of Drug Control Director Osvaldo Cianchini. The most criticized change, however, was the dual resignation of Planning Board President Hermengildo Ortiz Quiñones and his right hand Félix Aponte.

New Progressive Party President Carlos Pesquera seized on the news to say its more evidence of an administration without direction.

"The large number of resignations, firings and changes in the administration of Sila Calderón shows the lack of capacity and commitment of these officials to work for Puerto Rico," Pesquera said. "The general opinion of its mediocrity has impeded it from attracting new talent and has forced it to play musical chairs with the same people who have brought Puerto Rico to the brink of economic disaster."

Pesquera referred to the naming of Tourism Company Executive Director Milton Segarra to replace Cantero Frau. Segarras background, almost exclusively in hotel marketing, has many wondering whether he is up for the job.

The changes at the important Economic Development and Commerce Department come as others are questioning administration attempts to halt the purchase of Amigo supermarkets by Wal-Mart because of monopolistic concerns.

Justice Secretary Anabelle Rodríguez had won a restraining order in the local courts, only to have it knocked down by a federal court this week.

In issuing his ruling, US District Judge Juan Pérez Giménez said that Rodríguezs "implementation of the Puerto Rico Anti-Monopoly Act clearly reflects extreme protectionism with direct burdens on interstate commerce, and the conditions which could be said to protect and further local interests are not only discriminatory in their face against goods from other states, but are moreover being arbitrarily imposed on plaintiffs."

Thats not exactly a description of an administration trying to attract offshore investment.

Heres how The Daily Deal, a Wall Street publication specializing in mergers and acquisitions, describes the situation.

"Wal-Mart Stores Inc. has endured many brutal battles in its quest to expand, but few have been as tortuous as its year-long effort to acquire the Amigo supermarket chain in Puerto Rico.

"Wal-Mart has endured a 10-month fight with the U.S. Federal Trade Commission, bitter squabbles with grocers in Puerto Rico and a showdown with the island's secretary of justice that could result in the official going to jail for contempt of court."

The aggressive move by Justice against the merger is giving mixed signals to potential investors about the seriousness of administration pledges to foster economic development aggressively.

The fact that the Calderón administration point man on the economy quit in the midst of the row has added to that impression.

John Marino, City Editor of The San Juan Star, writes the weekly Puerto Rico Report column for the Puerto Rico Herald. He can be reached directly at: Marino@coqui.net